Chile aims to find new copper markets and expand its lithium industry as it seeks to shield its economy from a U.S-.China trade war, the mining minister of the world’s biggest copper producer said on Monday.
Baldo Prokurica also told Reuters the South American nation was considering further opening up its copper and lithium mining industry to foreign investors to capitalise on the demand for both metals from the growing electric vehicle industry.
“Chile is to electric vehicles what Saudi Arabia is to crude oil,” he said of his country, which sits on half the world’s lithium reserves.
“We are trying to further diversify our economy through the number and quality of trade agreements we have,” Prokurica said in an interview for the LME Week industry gathering in London.
As part of efforts to find new markets, he said Chile was examining its trade deal with India that he said was “quite basic but could include other products.”
Chile produces nearly a quarter of annual global copper output of around 23 million tonnes,
leaving its economy vulnerable to any downturn in China, which consumes about half the world’s copper supplies. One of the metal’s main uses is in the construction industry.
Washington and Beijing have imposed tariffs worth billions of dollars on each other’s imports, raising the risk of a broader global economic slowdown and weighing on copper prices.
“Were it not for the trade war between the U.S. and China, we would have a much higher copper price,” Prokurica said.
Chile’s government is forecasting an average copper price of $3 a pound this year, down from a forecast $3.06 in April.
Copper was last quoted at $2.74 a pound, having fallen from a four-year high around $3.25 in May.
Prokurica said Chile was also considering opening its copper and lithium reserves to foreign investment as part of its “Plan B” to shore up its economy against a slowdown in China.
Chile has about 7.5 million tonnes of lithium reserves. Lithium is used to make the rechargeable batteries for electric vehicles.
The Paris-based International Energy Agency estimates that by 2030 there will be 125 million electric vehicles on the road, versus 3.1 million in 2017. That total could rise to 220 million if environmental policies become more ambitious.
Prokurica said standard combustion-engine vehicles use around 23 kgs of copper and virtually no lithium, while electric vehicles use over 80 kgs of copper, as well as lithium.
(Reporting by Maytaal Angel and Amanda Cooper, editing by Edmund Blair)